October 30th 2006, 2:57PM [PST] – BOSTON – I have to thank all of the FTW subscribers who introduced themselves to me at the ASPO-USA Conference in Boston. Your messages of goodwill ranged from thanking me for my reporting to wishing Mike Ruppert well. Some told me that Mike Ruppert has changed their lives. I cannot thank all of you enough for the support; we desperately need all we can get.

As I told many at the conference, Mike is ill. He has stones in both kidneys, a cataract developing in one of his eyes, hypoglycemia, calcification of an enlarged prostate gland, dangerously low blood pressure and heavy blood toxicity from both known and as yet unknown sources. More medical tests are needed. That is the bad news. The good news is that a Cuban doctor in Caracas, Venezuela, is treating him free of charge. Please send your prayers to Mike as he and FTW enter the most difficult and dark time we have ever faced.

Reuters just reported that at the Boston World Oil Conference energy investment banker Matt Simmons said that US Government data indicates world oil production might have peaked in December of 2005. FTW reported that Simmons made this statement on October 4, 2006 in the Key Breaking News Stories from Around the World section of our website. And back on September 13th, in the same section of our website, we reported that data from the Energy Information Agency (EIA) was indicating we had likely reached peak in December of 2005. Of course it was geologist Kenneth Deffeyes of Princeton who first made this prediction many months ago using Hubbert’s model.

The Boston World Oil Conference that ran from October 25th through the 28th showed me that ASPO-USA has a much better understanding of the energy problems we are facing than they do of the local solutions we need. They are focusing on an ill-fated “Plan B” although, to their credit, they are not painting a rosy picture. The debate they are encouraging is relatively fair and balanced but only in the realm of big business ‘solutions’. My suspicions tell me that many in ASPO-USA largely agree with the “extreme” Peak Oilists (FTW, CultureChange, Back-to-the-Land Movement, etc…) but will not outwardly say so. Albert Bates had a table at the conference where he was selling Crossing the Rubicon.

Lynn Benander of Coop Power, a consumer owned cooperative building sustainable energy resources in New England and New York, was literally booed by a male-dominated audience when she dared to ask a very valid question – perhaps the most important question of the entire conference. I interviewed her after she was disrespectfully shutdown.

“I am concerned because all of the projections (in Hirsch Report 2) for how we are going to address Peak Oil issues are all very large business, significant interventions that have tremendous environmental impact issues,” said Benander. “They neglected 56% of our economy which is place-based businesses, non-profits, government entities, and cooperatives that are providing tremendous services and are also places people trust more.”

A very brief answer was given to her question from Robert M. Bezdek, who co-authored Hirsch Report 2 (fully titled Economic Impacts of Liquid Fuel Mitigation Options). Bezdek simply stated they don’t know how to estimate the impact of the sectors Benander brought up, so they are not included.

“The government is making its decisions about how to transfer our dollars for solutions using this data which is focused only on large business. It continues the multi-billion dollar transfer of public dollars to private hands that’s already going on, and this is about making it even bigger. There’s such a tremendous flow of money from poor to wealthy individuals, and I believe it’s these kinds of policies based on this kind of data that contributes to the problem. We need a different paradigm.”

Very well said. It is a shame that Benander did not get to say this to everyone at the conference. The findings of Hirsch Report 2, while focused exclusively on big business solutions, are very realistic and some would say pessimistic. FTW loves to see this type of hard data published because it tells us precisely where we stand, and what is clear from this report is that we have run out of time to mitigate Peak Oil with big-business-as-usual solutions. Coal to liquid fuel, LNG, coal bed methane, tar sands and every alternative we have combined are not going to mitigate this crisis in time. Place-based, decentralized local solutions are our only hope to build a sustainable society. FTW applauds Benander for pointing at the elephant in the living room.

Mike Ruppert’s critique of ASPO-USA’s first conference last year in Denver, Colorado, holds true for this second one.

Fact: Infinite growth is not possible.

Fact: The term “sustainable growth” is an oxymoron.

Fact: The current monetary system demands infinite growth because it is based upon borrowing and compound interest. Therefore, the monetary system needs to be addressed first. When Catherine Austin Fitts is asked to attend a Peak Oil conference and begin teaching how capital gains can be completely divorced from increased consumption; when Peak Oilists start demanding a disengagement from major banks and financial markets as part of an integrated solution; then other real solutions will be liberated. Until you change the way money works, you change nothing.

Fact: Peak Oil conferences will start to become more useful when somebody has the guts to ask something like, “What if global warming creates bigger hurricanes next year and they destroy more of our energy infrastructure?”; or “How can this guy propose using inedible crop waste for fuel instead of returning it to badly depleted topsoil which is yielding less and less food each year?”; or “Gee what are the African Americans, Chicanos and Latinos in the inner cities, what are India, China and every other country, going to say when we tell them, ‘Sorry, your shot at the great consumer paradise is gone? We’ve used everything up, including your share.’ How do we plan for that?” 1

Some of these issues were mentioned at this year’s conference, but they were never addressed head-on. ASPO-USA is not taking the approach suggested by Ruppert because his questions have ugly answers. Instead, the organization is positioning itself to influence major policy makers and big business in the years ahead. They were able to get the Wall Street Journal to come to the event.

The approach taken by ASPO-USA is understandable: It wants to be taken seriously within the mainstream. This is perfectly demonstrated by the fact that Raytheon’s new microwave technology for developing shale oil was presented at the conference. Raytheon alleges this technology is a much more energy-efficient way to heat shale oil in the ground for it to rise to the surface. They also claim very little water is needed in the process. There were other presenters who detailed the insurmountable problems of heavy oils in terms of cost analysis and logistics. The environmental cost was addressed as well, but it was under-analyzed.

When I spoke about this new Raytheon technology with Richard Heinberg he immediately said, “This development is terrible news.” Anything that helps to encourage the further exploitation of tar sands and shale oil is part of the problem, not the solution. Such “breakthroughs” will only increase CO2 emissions and environmental devastation. The tar sands in Alberta were developed so quickly (now producing 1 million barrels per day) no one fully thought through what would be done with the massive amounts of waste now piling up sky-high everyday. Perhaps no one cared enough to think that far ahead.

The catch-phrase from far too many presenters went something like, “Americans are not going to change the way they live so we should not ask them to.” On the second day of the conference Randy Udall gave an inspiring speech where he showed a video clip of Dick Cheney from May 14, 2001, saying we have to resist the “impulse to tell people that we live too well and that we have to do more with less.” While Udall was using Cheney’s words to emphasize the problem, ironically, ASPO-USA seems at times to indulge this mentality by focusing on what can be done to accommodate, rather than transform, the American consumer.

Not all of the presenters at the conference believe the American consumer needs to be coddled, but these people were in the minority. John Darnel, who is the energy advisor to Congressman Roscoe Bartlett; Julian Darley of the Post Carbon Institute; and Peak Oil expert Richard Heinberg all professed the urgent need to decrease demand by lessening consumption. Congressman Roscoe Bartlett and Richard Heinberg were both presented well-deserved M. King Hubbert awards for educating the public on Peak Oil. Heinberg, whose landmark book, The Party’s Over, was recently read by President Bill Clinton, was completely shocked to have received the award. Darnell accepted the award on behalf of Congressman Bartlett since he was unable to attend the conference. Bartlett sent a pre-recorded acceptance speech broadcasted at the conference where he praised Darnell for having more knowledge of Peak Oil than anyone he knows.

A challenge was issued before the conference to Daniel Yergin to debate Randy Udall on energy and Peak Oil, but Yergin didn’t show up (big surprise!). ASPO-USA Executive Director Scott Pugh, a recently retired high-ranking US Naval officer, had personally invited Yergin to the conference. It is of interest to note that Pugh said the world changed forever when Saudi terrorists flew a 757 into the building he was standing in on 9/11 – the Pentagon.

Matt Simmons SUPERSTAR!

I have a background within the entertainment industry. The only other place I have seen the type of celebrity status Matt Simmons is now experiencing is backstage at music venues. His profile and importance are rising steadily.

Matt Simmons surrounded

Simmons spoke in Crystal City at the Double Tree Hotel on June 20, 2005 to a predominantly military audience just five days before FTW’s offices were burglarized. Below is a transcript of my interview with Simmons in Boston at the ASPO-USA Conference on October 26th followed by a transcript of the Q&A from Crystal City on June 20th where Simmons was on fire. What impresses me most about Simmons is that he has graduated from proving the problem of Peak Oil to discussing immediate mitigation strategies that can work. Not many people have been able to make that jump. The two transcripts below clearly demonstrate this to be the case, and they complement each other beautifully. Do you want to know what we can do to address Peak right now?

FTW: We are currently in a plateau area of oil production. Jean Laherrere has detailed the “bumpy plateau” of oil production, and FTW has recently written about this. Professor Michael T. Klare says this plateau could last “a decade or more.” What do you think about that?

Matt Simmons: It’s so hard to try and accurately predict this. But what is easy to predict is the fact that there is just no way – with the limitation we have of oil rigs compared to projects – to keep supply growing: That’s an impossibility. But to stabilize the base for some period of time – if we didn’t have such an incredible limitation of drilling rigs that would take at least a decade to correct – I think that would probably be possible. But given the fact that we are not going to have significantly more rigs for at least another decade, and how old the fleet of rigs is, the size of the fleet is going to drop before it goes back up. I’d say sustaining the base for 5 or 10 years is not impossible but extremely long odds.

FTW: I saw you speak in Crystal City recently, but FTW did not publish a report after that because, unfortunately, our offices were burglarized 5 days later and we spun into turmoil. At this speech you brought up a number of ideas that I would say are radical including; 1) liberating the work force, 2) having people live and work in “villages,” and, 3) changing the way we ship goods to the degree that we have to ship them, among other suggestions. Little-to-none of this is being addressed today at this conference. Are we nearing the point where conferences such as these that focus on the problem might be irrelevant or may need to be updated?

MS: First of all we won’t implement any of these changes until our back is against the wall and we realize that we have to. These aren’t things that people say, “OK, 1-2-3, let’s jump in the lake!” I think it’s so important that we educate people that this is coming. I liken this to almost every major war. We could have prevented it five years before it started, but all of a sudden you realize we’re beyond the tipping point, and now we’re at war.

What’s interesting is that liberating the workforce is actually in motion right now in Houston, Texas. Our Mayor has initiated a program in September called “flex in the city.” It’s all about flexible work rules and recognizes companies that figure out programs to start this. It’s really addressing Peak Traffic. Our highways have been expanded as much as they can be and it won’t work anymore. Unless we create a flexible work force and stop this compulsion of long-distance driving, Houston doesn’t have a future. And it’s amazing how popular it has been, and company leadership is saying that this is really a good idea. This is the easiest to do because it’s basically just a mind state change. The key to it is basically paying people by productivity instead of 9 to 5.

FTW: In Crystal City you also said that there needs to be an “end to globalization,” but that this is harder to do than the other suggestions you gave. Do you have any ideas about how we can address this, and if you don’t, can you at least speak to this?

MS: Well by globalization I don’t mean talking to someone in India by telephone. What I mean is the concept that we can get increasingly inexpensive things to purchase because we broke them apart into the simplest unit and we found the cheapest sweatshop economy in the world to have it built in and then we basically ‘zing’ the parts around until finally you’ve built a car. And the energy used up in doing that wasn’t even thought about but it was one more element that gave rise to this astonishing rise in oil demand over the last 15 years. When we finally have to start shrinking the supply we’re going to have to do without something. One of the easiest things to do without is to stop this process in its tracks and start building things very close to where they are used. But none of this will happen until it has to – not until there is a crisis.

Transcript of Q&A, Matt Simmons in Crystal City, June 20, 2006

When asked what actions should be taken immediately to mitigate Peak, Simmons had three of the most valid suggestions I have ever heard that can be implemented over the next five years:

“My three favorites are easy to do, and we don’t need any new technology. I’m sure there are some better suggestions but they are not easy. The first thing I would do is go on a program over a 5-year period of time for zero tolerance of using large trucks to ship goods over roads long distances. Just stop. To the extent that you need to ship goods long distances, put them on rails-to-water. Use the water system to take goods coming from China that come to San Diego, all the way through the Panama Canal, up the water system to Portland, Maine. You can basically move that transport in a shorter period of time – ironically – than using trucks and with 1/35 the amount of oil. So anytime you get a 35 times improvement, that’s a big deal.”

“Then we need to end something that sort of crept into our lives over the past 25 years: The compulsion to be able to visualize fresh food, fresh meat, and exotic fish in every store where there is prosperity all around the world 365 days a year. You just stop that.”

“I rewrote the last chapter of my book called “Aftermath” for the paperback, and one of the interesting facts that I have in there came from the New York Times, December 20th, where they pointed out that now that the fishing fleets are going into such deep water because we’ve depleted shallow water fishing, the fishing fleet in 2005 used more oil than Holland did.2 This compulsion to ship food all over really became energy-intensive and inane – ironically – because Shaws Supermarket has a long-term supply contract: We get blueberries from Chili even during the blueberry season. (laughter)”

“The third thing is really the homerun, and ironically Houston, Texas is beginning to experiment with this as we speak. Liberate the workforce, reward companies that are the most liberated, and start paying by productivity, as opposed to the social contract of having to check in from 9 to 5. And that will basically end up making people work in clusters, in villages, and walk to work; ride a bike to work. So I think those three things can be done in a 5-year period of time and maybe buy us three or four decades.”

“I think ultimately we have to reduce globalization, and get away from this concept that we make things in the cheapest part of the world to make them and then send them around, but that’s harder.” [emphasis added]

***

When asked if he knew anything about the Re-localization, Intentional Community or Eco-Village movements, Simmons said he did not. That is quite ironic considering that many of his statements fall more in line with what these movements are trying to accomplish than what the mainstream is trying to accomplish.

Conference Highlights

The Boston World Oil Conference was where I first found out that Simmons did not know about Peak Oil until 2001 when he participated in a CIA study analyzing global oil production and decline rates. There were about 10 experts analyzing global oil production with various models. Simmons had no model, but how could anyone have any model without knowing the names of the world’s top producing oil fields? Simmons asked if any of the CIA’s experts could name the top ten fields in the world. Ghawar and Burgan were named, but that was it. Not even Cantarell, the gigantic oil field in Mexico that has recently passed its peak, was mentioned. Without this information it is impossible to estimate decline rates no matter what model is used.

This motivated Simmons to get the names of the top producing fields, and what he found was that 50% of the world’s oil is produced by 120 fields. Geologist Kenneth Deffeyes of Princeton told Simmons that his field-by-field analysis brought the first new discipline into the study of Peak Oil since M. King Hubbert; that is, not just looking at reserves, but looking at individual fields by production.

David Hughes of the Canadian Geological Survey threw down the gauntlet on North American natural gas production. FTW readers already know how dark this reality is. North America’s natural gas production peaked in 2001, and there are only 10 years of gas left. The rest of the world has 100 years left, according to Hughes, but later in the conference Matt Simmons revealed that 3 out of the 4 largest natural gas fields in Russia have passed their peak. Simmons also said that the data we have on Russia’s hydrocarbon reserves is very unreliable.

During Q&A I asked Hughes about decline rates for natural gas. We don’t have much data in this area, but some believe natural gas production falls off of a cliff – meaning depletion accelerates rapidly after peaking. Hughes measured his words carefully in his response by saying production will fall off a cliff if we stop drilling. If the U.S stopped drilling for natural gas, production would be down 28% in one year according to Hughes.

But let’s take what he said one step further: Eventually, drilling must stop because there will be nothing left to find but dry holes. Effectively Hughes’ answer to my question was, “Yes, production will eventually fall off of a cliff.”

Hughes was the only person to address hurricanes in regards to hydrocarbon production at the conference when he said we were lucky we had a very light storm season this year. Kenneth McDonnell, the Senior Media Relations Specialist with ISO New England (ISONE), told me there is no emergency preparation for winter fuel shortages this year because natural gas supplies are full, and there were no hurricanes. McDonnell was the main source for my report on winter fuel shortages last year. He is well aware of Peak Oil and regularly reads high-quality energy publications. The fact that he heads the public relations department of ISONE indicates there are other qualified and intelligent people within this critical organization. Hopefully, this is the case. New England is terribly vulnerable to fuel shortages and supply disruptions. It is at the end of the supply line and does not have an adequately diverse set of fuel options for a number of reasons that FTW laid out last year in our report, “Winter Fuel Shortages.”

Professor Michael T. Klare spoke (rather briefly) about the importance of a peaceful resolution to the global energy problems we are facing. He said the U.S. military is failing in its role as a protectorate of oil and oil flows. After Klare’s presentation he spoke with a small group that assembled around him and William Clarke, author of “Petrodollar Warfare.” Klare believes the U.S. was going to invade Iran this summer, but the failure of the campaign in Southern Lebanon forced Bush to hold-off. He believes an invasion of Iran – by air and sea alone, no ground offensive – is inevitable.

“When?” I asked him.

“Spring of 2007,” he replied with little hesitation.

Unfortunately I did not get to engage Professor Klare any further in regards to this. Nor did I get to speak to him about the bumpy plateau of oil production which he believes could last “a decade or more.” As reported earlier in this piece, Matt Simmons told me it is very unlikely (though not impossible) for the oil production plateau we are in now to last 5 to 10 years.

FTW does not see an invasion of Iran, or North Korea for that matter, any time soon if at all. The possibility of invasions such as these – the equivalent of starting World War III – will only enter the realm of possibility when the bumpy plateau of oil production ends and irreversible decline begins never to turn back again. All eyes are on oil production. As long as we remain in the volatile plateau area, the game of global capitalism can continue to transfer wealth from the “have-littles” to the “have-lots.” I don’t see World War III beginning unless (or until) this global economic shell game falls apart.

While Klare sees an invasion of Iran in the Spring of 2007, I see a then-President Hillary Clinton shaking hands with Kim Jong-il in Pyong Yang after visiting President Ahmadinejad in Tehran in the Spring of 2008. Only time will tell whose vision is more accurate.

William Clarke gave a solid presentation on how vulnerable the petrodollar is to emerging currencies. He sees a multi-polar world order emerging as other nations (China, Iran, Russia) start to denominate oil in currencies other than the dollar. During Q&A I asked Clarke for his opinion regarding Russia’s announcement that it will be opening an oil bourse priced in rubels. I mentioned that FTW’s military affairs editor, Stan Goff, believes that the petro-rubel could be the “checkmate” of the petrodollar largely due to Russia’s nuclear arsenal and large hydrocarbon reserves.

Clarke responded by saying, “I suspect that Vladimir Putin is a pretty good chess player.”

Protest – Energy Equity

During the second full day of the conference a protest broke out while Jim Gordon, CEO of Cape Wind, was in the middle of his presentation. The protestors were from Chelsea, Massachusetts, where Jim Gordon is behind a proposal to build a diesel peaking power plant across the street from an elementary school. Chelsea is by and large a Black and Latino community. The protestors wanted to point out that the rich residents of Cape Cod will have clean renewable energy next to them while the poor must bear the burden of a diesel power plant.

Jim Gordon responded to the protestors after they had been removed from the venue and forced to resume their activities on the street, so they were not present to respond. He said the proposed power plant would be using the cleanest low-sulfur fuel possible running no more than 500 hours a year, only during peak capacity. While Gordon made some good points (with no one present to challenge him), ask yourself how you would feel dropping your six-year-old child off at a school with a diesel power plant operating for even one hour right next door.

Challenging Renewable Dogma

The renewable energy panel at this conference consisted of Milton Maciel, former Secretary of Agriculture in Brazil; Lee Lynd, Dartmouth University; Jim Gordon, President of Cape Wind; and Steve Strong, Solar Design Associates. Everyone on the panel – especially Gordon and Strong – were advocating exponential growth of the renewable energy sector.

Thankfully John Darnell spoke after the panel and made the much-needed point that exponential growth is a part of the problem. He emphasized conservation efforts and lowering consumption as critical aspects of a sustainable energy paradigm. However Darnell does believe we need massive growth in the renewable energy sector to move away from hydrocarbon consumption.

I had to challenge the panel. Below is a transcript of the exchange between myself, Jim Gordon and Steve Strong.

Michael Kane: I want to take the position that is probably pretty unpopular here. I’m not necessarily against the Cape Wind project itself, but I do have reservations about putting up massive turbines all across the world in unlimited fashion. First, I want to say god bless John Darnell for pointing out that there are limits to growth and the importance of that. Scientist David Keith recently did a computer-generated study where his findings showed that if the world were eventually saturated with too many massive wind turbines, this could change global wind patterns and contribute to climate change. Of course, we do need renewable energy, of course we do need a lot of these projects to go forward, but my question is where are the limits and how far do we push them? If 30 years ago someone would’ve said, “If we burn too much fossil fuel there’s going to be all this CO2 in the air and it’s going to change the climate,” people would’ve said, “Your crazy!” So how far do we go with renewable energy? Are there limits to this?

Steve Strong: I would like to take this (inaudible) and ask you Michael whether you’re willing to live without electricity.

MK: Well, I think that it would be much better if we were addressing small-scale, decentralized cooperative systems that have a smaller impact on the environment: vertical wind turbines, small-scale solar, these things as opposed to trying to continue to increase what we consume every single year and implement what Richard Heinberg so aptly calls a POWERDOWN strategy. I don’t really see that being addressed here.

SS: That’s going to come on its own, and I think every single strategy that we saw here today, articulated in many different approaches – we need every single one of these things to the maximum to even get to the ability to consider Richard Heinberg’s, let us call it “gradual transition.” And again I ask are you willing to go without electricity? I don’t believe anyone in this room is. They may be willing to reduce their use of electricity, but please bear in mind – and you know this from your own work – China is building demand, India is building demand, and the rest of the 60% of humanity are trying to pull themselves up out of dire poverty by their bootstraps and emulate our – yours and mine – consumption of energy and we have no moral authority to say they can’t do that. So we need to set an example and that is where you and I agree. But we need every one of these technologies pushed to the max to hope to bridge this transition.

Jim Gordon: I’d like to add something to that. Michael, is it? You’re from From The Wilderness Magazine, so environmental stewardship is probably one of the mandates of your writing and work. There are 138 coal plants on the drawing board now for the United States. One of the reasons for this is because wind projects are being fought around the country. I’d like you to consider the effects of climate change and global warming on the wilderness. I’d like you to think about maple trees migrating north, away from New England. I’d like you to think about the fact that we’re losing acres of precious beach front, that our oceans are warming from global warming which is affecting fisheries. 35% of bird species, according to a recent article in Nature Magazine, could disappear if we do not start checking the emissions of CO2. You’ve got solar, you’ve got wind, you’ve got geo-thermal. I think in order to save the wilderness we have got to develop renewable energy projects wherever they work. So I agree with Steve.

MK: I will make this very brief. I appreciate your responses, but I worry about renewable energy being implemented to sustain a growth pattern that non-renewables can no longer sustain. I would suggest everyone look into the Intentional Communities movement, the Eco-Village movement, and Re-localization movement. Thank you very much.